results for the second quarter and first half 2020 · results for the second quarter and first half...

Results for the Second Quarter and First Half 2020

Vienna, July 21, 2020 – Today, A1 Telekom Austria Group (VSE: TKA, OTC US: TKAGY) announces its half year report including the results

for the second quarter and the first half of 2020, ending June 30, 2020 as well as the condensed consolidated financial statements.

Key performance indicators

in EUR million Q2 2020 Q2 2019 % change 1-6 M 2020 1-6 M 2019 % change

Total revenues 1,095.7 1,122.6 – 2.4 2,221.7 2,212.1 0.4

Service revenues 939.5 943.7 – 0.4 1,889.3 1,868.1 1.1

thereof mobile service

revenues 509.5 515.2 – 1.1 1,030.3 1,010.1 2.0

thereof fixed-line service

revenues 430.0 428.5 0.4 859.0 858.0 0.1

Equipment revenues 136.7 149.8 – 8.7 294.8 293.3 0.5

Other operating income 19.5 29.1 – 33.2 37.6 50.6 – 25.7

EBITDA before restructuring 415.1 413.2 0.5 811.7 808.2 0.4

% of total revenues 37.9% 36.8% 36.5% 36.5%

EBITDA 390.1 392.1 – 0.5 770.7 766.2 0.6


EBIT 151.6 154.6 – 1.9 299.0 294.8 1.4


Net result 113.8 70.0 62.7 203.1 155.9 30.3


Wireless indicators Q2 2020 Q2 2019 % change 1-6 M 2020 1-6 M 2019 % change

Wireless subscribers (thousands) 21,207.5 21,171.5 0.2 21,207.5 21,171.5 0.2

Postpaid 17,194.7 16,575.0 3.7 17,194.7 16,575.0 3.7

Prepaid 4,012.9 4,596.5 – 12.7 4,012.9 4,596.5 – 12.7

MoU (per Ø subscriber) 440.3 365.7 20.4 418.5 359.8 16.3

ARPU (in EUR) 8.0 8.2 – 1.8 8.1 8.0 0.8

Mobile churn (%) 1.4% 1.5% 1.4% 1.6%

Wireline indicators Q2 2020 Q2 2019 % change 1-6 M 2020 1-6 M 2019 % change

RGUs (thousands) 6,104.7 6,176.3 – 1.2 6,104.7 6,176.3 – 1.2

http://groupnet.telekomaustria.group/start

2 Results for the Second Quarter and First Half 2020

Table of Contents

Q2 2020 Analysis1 3

Half-year Highlights 12

Outlook 16

Detailed Figures 18

Additional Information 26

Condensed Consolidated Financial Statements 27

Condensed Consolidated Statements of Comprehensive Income 27

Condensed Consolidated Statements of Financial Position 28

Condensed Consolidated Statements of Cash Flows 29

Capital Expenditures 30

Condensed Consolidated Statements of Changes in Stockholders’ Equity 30

Net Debt 31

Condensed Operating Segments 32

Selected Explanatory Notes (unaudited) 33

Statement of all Legal Representatives 40

1 Alternative performance measures are included in this report. For details please refer to the tables on page 18 onwards.

A1 Telekom Austria Group 3

Q2 2020 Analysis

Group Summary

While the COVID-19 outbreak had only limited impact on Q1 2020 results; in Q2 2020, the effects of the

severe lockdown measures imposed by almost all governments in our footprint signaled the upcoming

challenges for our business. At the same time, the financials of the second quarter of 2020 reflect a resili-

ence in large parts of our operations and the positive effects of countermeasures taken by Management.

Reduced mobility, the suspension of businesses and strict travel restrictions weighed on several aspects in

Q2 2020, among which roaming traffic volumes, equipment sales, and FX movements were most adversely

affected. Initially imposed restrictions on public life, shops, and border closures were gradually lifted as of

May 2020 when most of the countries decided to cautiously abandon these measures and were set to reo-

pen their economies. However, certain travel restrictions and local measures have been reimposed since

June 2020 as a response to rising infections rates in some regions.

Group total revenues decreased by 2.4%, due to lower equipment revenues and roaming losses as

well as lower other operating income, following a real estate sale in Austria in the comparison pe-

riod. Additionally, revenues were also impacted by negative FX effects stemming mainly from Bela-

rus and, to a lesser extent, from Croatia. Excluding FX and one-off effects, total revenues remained

stable (-0.2%).

Mobile service revenues declined by 1.1% on a Group level as growth in Austria, Bulgaria and

Serbia was outweighed by roaming losses and negative FX effects

Fixed-line service revenues increased slightly, by 0.4%, as the growth in Bulgaria and Slovenia

made up for the decline in Austria and other international markets

Mobile contract subscribers rose by 3.7%, with growth in almost all markets

Fixed-line RGUs decreased by 1.2%, as the growth in high-bandwidth broadband and TV RGUs

could not compensate for the decline in low-bandwidth broadband and fixed voice RGUs in Austria

Group EBITDA before restructuring charges increased by 0.5% (reported: -0.5%) as roaming losses

were more than outweighed by cost savings. Excluding one-off and FX effects as well as restructur-

ing charges, Group EBITDA increased by 3.9%.

In Austria, EBITDA before restructuring charges increased by 0.4% (reported: -1.3%) as mobile

service revenues were able to grow despite the roaming losses, additionally supported by OPEX

savings. Excluding a one-off effect in the comparison period, EBITDA before restructuring grew

by 3.7%.

EBITDA from international operations declined by 0.9%, mainly due to negative FX effects in

Belarus and roaming losses in Croatia, while the Bulgarian segment again showed strong

growth

Net result increased by 62.7% compared to the previous year, both periods being significantly im-

pacted by decided tax cases in Bulgaria

Q2 2020 showed a particularly strong free cash flow generation of EUR 158.8 mn (Q2 2019: EUR

34.2 mn), due to lower capital expenditures paid and better working capital trends in the reporting

period, while Q2 2019 was impacted by paid frequencies for spectrum auctions.

Outlook 2020: ~2% decline in total revenues, mainly driven by negative impacts from roaming and

FX as well as lower equipment revenues; Capex cuts of ~25% compared to the initial outlook (EUR

770 mn capital expenditures before spectrum and acquisitions) to ensure flexibility and to

strengthen the free cash flow profile

The presentation for the

conference call and key

figures of A1 Telekom Austria

Group in Excel format (‘Fact

Sheet Q2 2020’) are

available on the website at

www.a1.group.


The following factors should be considered in the analysis of A1 Telekom Austria Group’s quarterly operat-

ing results:

Negative roaming impact on Group EBITDA of around 5% due to the sharp decline in roaming traffic

in the course of imposed travel restrictions

Restructuring charges in Austria amounted to EUR 25.0 mn in Q2 2020 (Q2 2019: EUR 21.1 mn)

There were positive one-off effects in Q2 2019 of EUR 8.2 mn in total revenues and EUR 6.8 mn in

EBITDA, stemming mainly from the sale of real estate included in other operating income in Austria

Negative FX effects amounted to EUR 16.4 mn in total revenues, EUR 12.2 mn in service revenues

and EUR 7.1 mn in EBITDA in Q2 2020, stemming mainly from Belarus and, to a lesser extent, from

Croatia

Mobile Subscribers and Fixed-line RGUs

In mobile communications, the number of subscribers of the A1 Telekom Austria Group remained stable

(+0.2%) at 21.2 million in the quarter under review. In the Austrian market, the regulation for registering

SIM cards has been effective as of January 1, 2019. Existing customers could register until September 1,

2019. This led again to considerably lower gross additions and subscriber numbers in the prepaid seg-

ment.

The number of contract customers rose in almost all markets, driven by ongoing strong demand for mobile

WiFi routers. The number of A1 Digital M2M customers further increased in Q2 2020 while prepaid cus-

tomer numbers continued to decline as most markets are seeing an ongoing shift from prepaid to contract

offers.

The number of revenue-generating units (RGUs) in the Group’s fixed-line business declined by 1.1% year-

on-year. The decline in RGUs in Austria was driven by low-bandwidth broadband and voice RGUs, while

speed upgrades were particularly strong also in Q2 2020. In the international markets, the number of

RGUs rose due to TV and broadband RGUs.

Number of postpaid

subscribers grew by 3.7% in

Q2 2020; RGUs decreased

by 1.2%


Austria


Financials


Total revenues 635.9 658.5 – 3.4 1,283.4 1,305.3 – 1.7

Service revenues 574.1 576.6 – 0.4 1,151.6 1,153.8 – 0.2

thereof mobile service revenues 232.4 229.9 1.1 469.8 460.8 2.0

thereof fixed-line service revenues 341.7 346.7 – 1.4 681.8 693.0 – 1.6

Equipment revenues 51.0 62.1 – 18.0 109.8 117.6 – 6.6


EBITDA before restructuring 258.3 257.4 0.4 497.7 504.3 – 1.3


EBITDA 233.3 236.3 – 1.3 456.7 462.3 – 1.2


EBIT 100.8 109.9 – 8.3 195.6 211.7 – 7.6



Wireless subscribers (thousands) 5,003.7 5,241.2 – 4.5 5,003.7 5,241.2 – 4.5

thereof postpaid 3,915.2 3,851.8 1.6 3,915.2 3,851.8 1.6

thereof prepaid 1,088.6 1,389.4 – 21.7 1,088.6 1,389.4 – 21.7

MoU (per Ø subscriber) 383.7 279.3 37.3 366.6 278.7 31.5

ARPU (in EUR) 15.4 14.5 6.2 15.5 14.5 7.2

Mobile churn (%) 1.3% 1.4% 1.4% 1.4%


RGUs (thousands) 3,193.7 3,283.7 – 2.7 3,193.7 3,283.7 – 2.7

In the second quarter of 2020, all Austrian network operators continued offering their convergent prod-

ucts. Competition in the Internet@home business, which comprises of mobile WiFi routers, hybrid, and

pure fixed-line broadband solutions, remained intense in the second quarter of 2020, following new pric-

ings of high-bandwidth products and bundles with security products.

To address these competition moves, A1 launched a new broadband promotion at the end of April 2020,

offering attractive benefits to new and existing fixed-line broadband customers, such as a free tablet and

no installation fee. As of June 29, 2020, this promotion has been amended to include some special re-

gional offers and, above all, a premium WiFi mesh set which also provides better quality broadband Inter-

net connections at the customer’s premises. The promotion aimed to improve the downward trend of fixed-

line orders, which were additionally discouraged by the lockdown measures imposed earlier in March

2020. This resulted in improving numbers of gross-adds in May and considerably higher sales volumes in

June compared to the previous year, improving the negative trend in net-adds from the previous quarter.

In the mobile segment, demand peaked on the business side during the first few weeks of the lockdown,

while the residential side showed some signs of slowing down. Yet, these trends reversed approaching the

end of the quarter and market dynamics started to normalize.

A1 launched its “5Giga” premium tariff portfolio in January 2020 for both the mobile and Internet@Home

segments. 5GigaMobil tariffs offer a priority network proposition, unlimited data volumes, as well as the

latest 5G devices. 5GigaNet tariffs feature a bandwidth guarantee of minimum 90% for FTTH products,

while 5GigaCube tariffs for mobile WiFi routers offer, in addition to the priority network proposition, in-

creased speeds as well as premium hardware. While the initial uptake for these 5Giga tariffs showed strong

demand in the first quarter, the trend has weakened with the new environment caused by the COVID-19

Strong demand on the

mobile business side during

the first weeks of the

lockdown


outbreak. Besides the 5GigaMobil tariffs, A1 also offers attractive LTE mobile tariffs with increased data

allowances.

Competition in the mobile low-value and youth segments intensified again in the second quarter, with ag-

gressive offers including voice and hardware promotions, which A1 continued to counter via special youth

promotions and attractive offers with its no-frills brands. As SIM card registration has been effective as of

January 1, 2019 for new customers and as of September 1, 2019 for existing customers, unregistered SIM

cards will be cancelled by October 2020 at the latest. Prepaid revenues have only a minor impact on ser-

vice revenues.

In March 2020, A1 successfully launched its new TV platform A1 Xplore TV, with 260 channels, 7-day re-

play, multiscreen experience, up to 500 hours recording, and many integrated apps on TV, tablet,

smartphone, laptop, and chromecast. While the migration of existing customers to the new platform

started well and provided additional support to ARPL in Q2 2020 due to the higher pricing of the new prod-

uct, acquiring new customers remains a challenge.

In November 2019, prices for existing fixed-line voice customers were increased. As of April 1, 2020, an

indexation of approx. 1.5% has been effective for existing customers in parts of the mobile high-value and

the fixed-line business. Furthermore, the activation fee and the annual service fee were increased for mo-

bile customers and tariff switches respectively in February 2020.

Impact of COVID-19

The containment measures implemented by the Austrian government on March 16, 2020 have taken effect

and the number of new infections in Austria was in continuous decline during the second quarter. At

around mid-May 2020, the country started with a gradual and monitored re-opening. Schools, restau-

rants, and museums opened again on May 15, while accommodation facilities have been available again

since May 29. Shops operated by telecommunications providers were allowed to stay open during the lock-

down. At the beginning of July 2020, regional measures were reintroduced by some local governments as a

response to some rises in the number of infections.

The initial surge in mobile and fixed-line voice and data traffic following the announcement of containment

measures started to decline only slowly towards the end of the second quarter and volumes in the fixed-line

business are still higher compared to their pre-COVID-19 levels, while mobile voice and data traffic has nor-

malized. TV usage and video-on-demand increased considerably during the lockdown but have since re-

turned to normal. Despite these initial rapid consumption increases, network quality, also at peak hours,

remained high.

Extraordinarily high demand for mobile WiFi routers and mobile devices for business customers since the

end of the first quarter started to normalize in May and June 2020. In the residential mobile business, gross

adds began to improve after April 2020, while the churn remained low. The share of online purchases ini-

tially increased from below 10% to approximately 20%, yet returned to close to its old level after the lifting

of lockdown measures.

At the beginning of June, the Austrian government started to re-open its borders with most neighboring

countries while, later in the month, travel restriction bans were also lifted for other selected EU countries.

As of July 1, the government decided to shortlist several non-EU countries whose citizens may travel to Aus-

tria. Roaming revenues were hit considerably from March 2020 due to the premature stop of the winter

tourist season and were additionally negatively affected by the travel restrictions imposed and border clo-

sures throughout the second quarter.

The fixed-line business continued to be shaped by strong demand from business customers for VPN con-

nections and bandwidth upgrades, especially at the beginning of the second quarter. In the residential

business, fixed-line orders initially declined due to lockdown measures, but the trend improved as a result

Mobile voice and data traffic

started to normalize, but

fixed-line volumes are still

higher compared to pre-

COVID-19 levels


of the abovementioned broadband promotion. Demand for bandwidth upgrades from existing customers

remained high in the second quarter. The fixed-line voice business, even though undergoing a long-term

declining trend, contributed positively during the second quarter due to increased voice traffic and the

price increases in November 2019.

Q2 2020 results

Total revenues in the Austrian segment declined by 3.4% in the second quarter of 2020, driven by lower

equipment revenues, roaming losses, as well as other operating income, which was higher in the compari-

son period, stemming from the sale of real estate. Service revenues declined only slightly, by 0.4%.

Mobile service revenues increased in the second quarter of 2020, as the strong demand for mobile WiFi

routers and successful upselling activities in the high-value segment outweighed the losses in roaming rev-

enues caused by deteriorating market dynamics amidst the COVID-19 crisis. ARPU increased due to the

higher share of contract customers following SIM card registration. Additionally, the strong demand for

mobile Wi-Fi routers and high value tariffs also drove ARPU.

Equipment revenues declined sharply due to a considerably lower number of devices sold during the con-

tainment period at the beginning of the second quarter.

Fixed-line service revenues declined by 1.4% in Q2 2020, entirely driven by markedly lower interconnection

revenues as the volume of international call traffic decreased during the outbreak and due to a less favora-

ble destination mix. Retail fixed-line service revenues remained stable (-0.2%) and were positively affected

by higher voice traffic and broadband upgrades, as well as abovementioned price increases. This came in

spite of losses due to customers’ voucher redemption and lower installation fees collected, both conse-

quences of the broadband promotion campaign mentioned above. Solutions and connectivity revenues

grew in the second quarter, despite some negative pandemic effects, on the back of increased demand for

data center, security, and workplace services. ARPL increased by 3.9% due to successful upselling

measures and the price increases in November 2019.

Internet@home subscriber numbers, which include pure fixed-line broadband RGUs, hybrid modems, and

mobile WiFi routers, grew by 1.5% year-on-year. This growth was once again driven by ongoing strong de-

mand for both high and low-value mobile WiFi routers.

The equipment margin worsened in the second quarter due to fewer promotional deals as well as positive

inventory value adjustments in the comparison period. Total subsidies decreased following the decline in

equipment sales, attributable to the negative effect of the COVID-19 outbreak, while subsidies per device

were also lower compared to previous year.

EBITDA before restructuring increased by 0.4% (reported: -1.3%), due to growing mobile service revenues

despite the roaming losses as well as due to OPEX savings, especially in workforce costs and advertising

expenses. While the former declined mainly due to lower travel and training expenses, the latter decreased

mainly due to seasonal shifts in promotional activities. Additionally, EBITDA in the comparison period bene-

fited from the abovementioned real estate sale. Excluding this one-off effect and restructuring charges,

EBITDA showed growth of 3.7%.

Internet@home continued to

grow at 1.5% year-on-year


International operations


Financials


Total revenues 465.9 476.2 – 2.2 951.3 929.3 2.4

Service revenues 371.5 379.0 – 2.0 750.6 735.8 2.0

thereof mobile service revenues 278.6 289.7 – 3.8 563.6 557.2 1.2

thereof fixed-line service revenues 92.9 89.3 4.0 187.0 178.6 4.7

Equipment revenues 85.7 87.7 – 2.3 184.6 176.0 4.9


EBITDA 172.0 173.6 – 0.9 343.5 334.7 2.7


EBIT 67.6 63.1 7.2 136.0 115.0 18.2



Wireless subscribers (thousands) 14,517.5 14,603.3 – 0.6 14,517.5 14,603.3 – 0.6

thereof postpaid 11,593.2 11,396.2 1.7 11,593.2 11,396.2 1.7

thereof prepaid 2,924.3 3,207.1 – 8.8 2,924.3 3,207.1 – 8.8


RGUs (thousands) 2,911.0 2,892.6 0.6 2,911.0 2,892.6 0.6

International operations showed a decline in total revenues of 2.2%, and in EBITDA of 0.9%, mainly driven

by the Belarus and the Croatian segments, while the Bulgarian segment grew again. Excluding the nega-

tive FX effects, international operations grew by 1.3% and 3.2% in total revenues and EBITDA, respectively.

Bulgaria

Revenue growth remained solid in the Bulgarian market in Q2 2020, despite the negative pandemic ef-

fects. Service revenues grew on the back of the fixed-line business, which continued to be driven by cus-

tomized corporate solutions, upselling in the broadband segment, as well as enriched TV content. This led

to a higher ARPL as well as more TV and broadband RGUs. Mobile service revenues also increased due to

effective upselling activities. However, this growth slowed somewhat due to declining roaming revenues.

General mobility restrictions with regards COVID-19 were lifted at the beginning of May 2020, while recom-

mendations to reduce physical contacts and to enable home office for employees still remain. All schools

and universities will be closed until September 2020. The border closure has been lifted with the exception

of certain nationalities with a high risk of pandemic spread. At the beginning of July, a slowly rising trend of

new daily infections was noticed in Bulgaria, which at the time did not however have an effect on business

operations in the country.

In Q2 2020, total revenues increased by 5.3%, driven by higher service revenues (+6.0%) as well as slightly

higher equipment revenues coming from ICT and business customers. Total costs and expenses rose due

to higher content costs and higher administrative expenses, while the equipment margin deteriorated

slightly. As a consequence, EBITDA increased by 6.7%.

Croatia

In Q2 2020, as self-isolation and physical distancing measures took effect, economic activity in Croatia

showed the first signs of a recession. Being heavily dependent on tourism and Italy as the largest trading

partner, the Croatian economy is one of the hardest-hit in the region.

Excluding FX effects, EBITDA

increased by 3.2% in CEE

markets


Triggered by the COVID-19 crisis, all telecom operators started to offer additional benefits to their custom-

ers, such as free TV content and special promotions on the fixed-line side as well as unlimited data tariffs,

hardware discounts, and free data packages on the mobile side.

In the fixed-line market, digital channel push and additional benefits for customers such as free TV content,

hardware, and discount promotions were all reactions of A1 Croatia to COVID-19 challenges. In the mobile

market, negative pandemic effects are being mitigated with free data options, hardware discounts, as well

as high end tariffs with double data volumes in the prepaid segment.

Following the easing of lockdown measures, borders with neighboring and most EU countries have been

reopened as of the beginning of June. The situation in the tourism sector improved slightly compared to

April and May, with certain COVID-19 preventive measures still in place and obligatory tourist registration

prior to entering the country. All shops and shopping malls have been reopened, while schools and univer-

sities are allowed to work at limited capacity.

As of mid-June, the number of COVID-19 cases started to rise again and are now exceeding the first wave’s

peak in March. The government is considering a re-introduction of restrictions on some borders and public

meetings in the event of a further significant increase in COVID-19 cases, with the intention of avoiding a

full lockdown. Earlier, the government had introduced measures to support businesses during the COVID-

19 lockdown, including postponements of tax payment, working capital and liquidity loans, as well as mini-

mal salary support to affected businesses.

The Croatian Kuna depreciated by 2.1% (period average) against the Euro in Q2 2020, which led to a neg-

ative FX impact of EUR 2.2 mn on total revenues and EUR 0.7 mn on EBITDA.

In Q2 2020, total revenues in the Croatian segment declined by 6.8% year-on-year, driven by lower service

revenues and reduced equipment sales. A decline in service revenues was driven by lower roaming and in-

terconnection revenues, as well as unfavorable FX impacts. Lower costs and expenses due to reduced sales

and marketing expenses, as well as administration costs, could not compensate for the decline in service

revenues, which drove EBITDA down by 3.2% compared to the previous year.

Belarus

In Q2 2020, economic activity in Belarus slowed down and businesses also suffered from the COVID-19

pandemic. The inflation rate stood at 5.2% in June 2020. The Belarusian Ruble depreciated against Euro in

Q2 2020 by 12.2% compared to the same period last year (period average).

In the second quarter, market dynamics slowed down and, while operators continued to focus on retaining

and upselling existing customers, acquiring new customers has become more difficult. A1 benefits from its

ability to offer nationwide LTE coverage following the acquisition of LTE capacities in December 2019.

In contrast to the other A1 markets, the Belarusian government imposed no official restrictions in connec-

tion with the COVID-19 outbreak but people have been asked to minimize social contacts. From mid-April,

the country’s pandemic situation worsened and the number of officially reported new infections started to

rise. However, this trend stabilized in June and the number of new COVID-19 cases started to decline to-

wards the end of the second quarter. As of April 24, 2020, A1 Belarus closed some less frequented shops

and has launched an online store in order to shift more sales to digital channels. At the beginning of July

2020, all A1’s own points of sales been reopened and are functioning at full capacity.

On March 26, 2020, A1 Belarus successfully launched its attractive #stayonline initiative, with unlimited

data and 30 free TV channels, films, and series as a means of upselling to existing mobile and fixed-line

customers. This also continued in the second quarter of 2020 and played an important role in the acquisi-

tion of new customers.


Already in the second half of 2019, A1 Belarus redesigned its mobile portfolio to include more data-centric

propositions and optional data add-ons for voice-only prepaid propositions as well as aiming to shift pre-

paid customers to contract offers. In Q2 2020, A1 launched a convergent service plan including mobile

and fixed-line connectivity, as well as TV services, which has been positively accepted by the market and

resulted in higher subscriber numbers.

As of July 1, 2019, an inflation-linked price increase of 4.3% was implemented for mobile customers. Fixed-

line tariffs for existing customers were increased by 6.0% in June 2019.

Due to negative FX effects of EUR 14.2 mn, total revenues declined in Euro terms, while they rose by 6.9%

on a local currency basis. This growth was driven by higher service revenues as mobile service revenues

grew despite the negative roaming effect due to the upselling measures and structural shifts in the new

portfolio with higher monthly fees as well as due to the abovementioned price increase. Fixed-line service

revenues also rose on the back of price increases. The equipment margin improved, driven by a better ICT

equipment margin resulting from a large business project. Costs and expenses were lower on the local cur-

rency basis, mainly due to lower equipment costs but also due to lower advertising expenses. On a local

currency basis, EBITDA increased by 7.9% compared to the same period last year. In Euro terms, EBITDA

declined by 5.5%.

Other segments

In Q2 2020, competition in the Slovenian mobile market remained intense and all operators continued with

their promotions. Although the market had become calmer in April due to the COVID-19 crisis, the activity

gradually returned in May and June to its pre-COVID-19 levels. A1 Slovenia introduced its new Xplore TV

platform on the market, together with new propositions such as higher speeds, satisfaction guarantee, no

binding period as well as increased pricing. Most of the COVID-19 measures imposed around mid-March

have now been lifted and the mobility of the population is returning to normal. Border closures remained in

place only for certain countries with critical pandemic developments. Total revenues declined by 1.4% in

Q2 2020, driven by lower service revenues, as higher fixed-line revenues only partly mitigated the decline

in mobile service revenues. While the former increased due to successful customer acquisition and in-

creasing the subscriber base, the latter declined due to lower roaming revenues as well as reduced in-

bound airtime and migration to bundle plans. Costs and expenses declined slightly in Q2 2020, mainly due

to lower sales costs and lower administration expenses. Equipment costs increased, however, following

higher subsidy levels after the lifting of COVID-19 restrictions which weighed on the equipment margin. In

total, EBITDA decreased by 2.9%.

While the mobile market in Serbia started to show signs of maturity, with declining subsidies in the first

quarter, after the COVID-19 lockdown in the second quarter competition has become more aggressive, in-

volving the introduction of hardware promotions with discounts and higher subsidies. The redesign of the

portfolio in February 2020, based on a “more for more” concept with higher data allowances for tariffs in-

cluding hardware, led to a stronger differentiation against SIM-only tariffs which continued also in Q2

2020. Similarly, demand for unlimited voice and SMS tariffs with flat data allowances and the popularity of

mobile WiFi routers have increased even more in the second quarter. During the COVID-19 outbreak, the

competition offered free add-ons for social network apps as a part of an appeal to its users to stay at

home. Vip mobile also provided free-of-charge services to access certain home-schooling materials. Strict

lockdown measures, with curfews, closed public institutions and transportation as well as the repayment

relief programs that had been in place from mid-March, were gradually lifted starting mid-May. At the be-

ginning of July, a rising number of infections in the country led to several containment measures being re-

imposed by city governments.

Total revenues declined by 1.2% as the growth in service revenues was outweighed by the decline in equip-

ment revenues following reduced equipment sales during the lockdown period. Costs and expenses also

fell, mainly due to lower administration expenses as well as lower advertising and commission costs. The


equipment margin worsened due to lower quantities sold and deferrals in connection with IFRS 15. Alto-

gether, this led to an EBITDA increase of 1.2% year-on-year.

With the introduction of a regional retail roaming agreement for the Western Balkan countries, roaming

rates have been cut as of July 1, 2019 and are planned to be abolished entirely by July 1, 2021. This affects

both Serbia and North Macedonia.

In Q2 2020, mobile operators in North Macedonia focused on promotional activities through online sales

channels following publicly restricted working hours and mainly addressed their prepaid and business

segments with attractive data packages and office products, accompanied by higher subsidies. A1 used

the opportunity to launch digital products like A1 Live shop and SMS bill. As of March 11, 2020, restrictions

on public life were introduced, with closed schools and universities. Telecommunication shops were also

partially closed. While the pandemic situation improved initially, it started to worsen again around the end

of May. Thus, most of the measures which had been lifted at the end of May and beginning of June had to

be re-introduced shortly afterwards, impacting the pace of market recovery.

Total revenues declined by 3.5%, driven by lower mobile service revenues which were partially mitigated by

a slight increase in fixed-line service revenues. Mobile service revenues declined due to deteriorating

trends in the business and prepaid segments. Costs and expenses were lower mainly due to a decrease in

advertising expenses. A better equipment margin only partially compensated for the decline in service

revenues, resulting in 6.0% lower EBITDA.


Half-year Highlights

Group total revenues increased slightly, by 0.4%, driven by service revenue growth despite

roaming losses, compensating for lower other operating income, which was impacted by a

real estate sale in Austria in Q2 2019. Excluding FX and one-off effects, total revenues increased by

1.6%.

Mobile service revenues rose by 2.0%, driven by Austria, Bulgaria, and Serbia, mainly due to the

ongoing strong demand for mobile WiFi routers

Fixed-line service revenues remained stable (+0.1%), as the growth in international markets com-

pensated for the decline in Austria.

Group EBITDA before restructuring charges increased by 0.4%, driven by higher service revenues.

Excluding one-off and FX effects, EBITDA increased by 2.3%

In Austria, EBITDA before restructuring declined by 1.3%, negatively impacted by roaming

losses. Excluding the one-off effect in the comparison period, Austrian EBITDA remained stable

(+0.3%)

The increase in EBITDA from international operations of 2.7% was particularly supported by

Bulgaria, Belarus, and Serbia

Net result increased from EUR 155.9 mn in the first half of 2019 to EUR 203.1 mn in the first half of

2020

The following factors should be considered in the analysis of A1 Telekom Austria Group’s half-year operat-

ing results:

Total one-off effects of positive EUR 8.2 mn in revenues and EUR 6.8 mn in EBITDA in the first half of

2019, stemming mainly from a real estate sale included in other operating income in Austria

Negative FX effects amounted to EUR 18.5 mn in total revenues, EUR 13.9 mn in service revenues

and EUR 8.0mn in EBITDA in the first half of 2020, stemming mainly from Belarus and, to a lesser

extent, from Croatia

Segment Austria

Total revenues in the Austrian segment declined by 1.7% year-on-year in the first half of 2020, driven by

lower equipment revenues and lower fixed-line service revenues in the second quarter, as well as lower

other operating income, following a real estate sale in Austria in the comparison period.

Mobile service revenues increased, driven by growth in mobile WiFi routers as well as successful upselling

activities in the high-value segment, but were negatively impacted due to the COVID-19 outbreak and re-

sulting losses in roaming revenues.

Fixed-line service revenues declined due to lower interconnection and slightly lower retail fixed-line service

revenues. The former decreased sharply following the outbreak due to declining traffic volumes in interna-

tional calls and a less favorable destination mix. Retail fixed-line service revenues mainly declined due to

customers’ voucher redemption and lower installation fees collected, both consequences of the broad-

band promotion campaigns in the first half of the year. The equipment margin improved in the first half of

the year mainly driven by better ICT equipment margin.

EBITDA excluding restructuring charges declined by 1.3% as roaming losses, lower retail fixed-line service

revenues as well as a positive one-off effect in the comparison period were only partially mitigated by OPEX

savings and higher mobile service revenues.


International operations

In the first half of 2020, international operations showed an increase in total revenues of 2.4%, driven by

fixed-line and mobile service revenue growth. Service revenues grew despite the roaming losses and nega-

tive FX effects, with Bulgaria and Serbia as the main positive contributors. EBITDA increased by 2.7%, par-

ticularly driven by Bulgaria.

Segment Bulgaria

In the Bulgarian segment, total revenues increased by 9.9% in the first half of 2020, driven by the growth

both in the fixed-line and the mobile segments. The fixed-line business was driven by strong demand for

customized corporate solutions, broadband speed upgrades as well as enriched TV content. Mobile ser-

vice revenues also grew due to successful upselling to existing customers via higher subsides but were

negatively impacted by roaming losses following the pandemic containment measures.

Cost and expenses also increased, driven by higher cost of equipment in the first quarter due to strong de-

mand for handsets while content costs also increased.. In total, this led to EBITDA growth of 6.9%.

Segment Croatia

In the Croatian segment, total revenues declined by 3.9% year-on-year, driven by roaming losses as well as

lower equipment revenues following deteriorating market trends caused by the COVID-19 pandemic, espe-

cially in the second quarter of 2020.

The Croatian Kuna depreciated by 1.5% (period average) against the Euro in the first half of 2020, which

led to a negative FX impact of EUR 3.1 mn on total revenues and EUR 1.0 mn on EBITDA.

Costs and expenses declined, driven mainly by lower equipment costs as well as lower commission, sales

and advertising expenses. The decline in service revenues in the second quarter was outweighed by the

cost savings, which led to an EBITDA increase of 0.8% year-on-year.

The regulator approved the acquisition of Tele2 by United Media on January 30, 2020.

Segment Belarus

In the Belarusian segment, total revenues increased by 4.5%. Excluding the negative FX effects, total reve-

nues rose by 12.5% in the first half of 2020. This rise was mainly driven by higher equipment revenues from

ICT business, while service revenues also grew in local currency terms. Mobile service revenues increased

due to the upselling measures and structural shifts to the new portfolio with higher monthly fees as well as

due to an inflation-linked price increase of 4.3% for mobile subscribers as of July 1, 2019. In the fixed-line

business, price increases of 6% in June 2019 contributed to fixed-line service revenue growth.

The FX development had a negative impact of EUR 15.9 mn on revenues and EUR 7.1mn on EBITDA in the

first half of 2020 as the Belarusian Ruble depreciated by 7.1% against the Euro (period average).

Costs and expenses rose mainly due to higher cost of equipment,higher workforce costs as well as in-

creased bad debts. On a local currency basis, EBITDA increased by 10.3%. In Euro terms, EBITDA rose by

2.5% in the first half of 2020.

Other segments

In the Slovenian segment, total revenues declined by 3.2% as the growth in fixed-line service revenues only

partially mitigated the decline in mobile service revenues and equipment revenues, especially in the

second quarter. Fixed-line service revenues grew due to an increasing subscriber base, while mobile


service revenues declined mainly due to lower roaming revenues. Costs and expenses improved as lower

equipment costs owing to reduced equipment sales as well as lower workforce costs outweighed the

increase in content costs. This together led to an EBITDA decline of 1.7%.

In Serbia, service revenues increased by 5.5% in the first half of 2020, driven by strong demand for new

tariffs featuring higher data allowances, unlimited voice and SMS, as well as new hardware. In the second

quarter, dynamism in the market deteriorated due to strict lockdown measures in the country, impacting

negatively on roaming revenues and especially weighing on equipment sales. Equipment margins

worsened, particularly in the second quarter, due to declining quantities and negative effects from IFRS 15

deferrals. Cost and expenses increased slightly which led to EBITDA increase of 4.2% year-on-year.

In North Macedonia, total revenues declined by 2.9%, driven by lower service revenues, lower equipment

revenues as well as lower other operating income. A negative pandemic effect weighed both on roaming as

well as equipment sales. Costs and expenses decreased due to lower advertising and commission ex-

penses, while the equipment margin also improved slightly due to fewer subsidies provided in the second

quarter. EBITDA declined in the first half of the year by 5.1%.

Group profit and loss – below EBITDA

In the first half of 2020, depreciation and amortization (incl. rights of use) remained stable (-0.1%) at EUR

471.7 mn.

Operating income increased by 1.4% from EUR 294.8 mn in the first half of 2019 to EUR 299.0 mn in the

first half of 2020.

Net result increased by 30.3% from EUR 155.9 mn in the first half of 2019 to EUR 203.1 mn in the reporting

period, significantly impacted by decided tax cases in Bulgaria.

Net result increased by

30.3% in the first half of

2020


Cash flow

(in EUR million) 1-6 M 2020 1-6 M 2019 % change

Cash flow from operating activities 758.9 668.8 13.5

Capital expenditures paid – 370.3 – 473.2 21.7

Proceeds from sale of plant, property and

equipment 5.3 11.7 – 54.8

Interest paid – 44.5 – 53.7 17.1

Lease principal paid – 85.8 – 84.9 – 1.1

Free cash flow 263.5 68.7 283.8

Cash flow from operating activities increased in the first half of 2020 due to lower working capital needs

and lower income taxes paid. In the first half of 2020, ‘Changes in financial positions and other’ in the

amount of EUR -55.2 mn (1-6M 2019: -135.9 mn) were mainly driven by lower trade receivables, accounts

payable, and restructuring payments.

Capital expenditures paid in the first half of 2020 declined due to acquired frequencies in the comparison

period and reduced spending in the reporting period following the postponement of some investments.

Proceeds from the sale of plant, property and equipment came in lower in the first half of 2020 as the com-

parison period benefited from the sale of real estate in Austria, while interest paid was impacted by the Bul-

garian tax cases. In total, free cash flow increased from EUR 68.7 mn in the first half of 2019 to EUR 263.5

mn in the reporting period.

Balance Sheet

As of June 30, 2020, the balance sheet total decreased by 1.8% compared to December 31, 2019, driven

by the decline of non-current assets while current assets slightly increased. Total current assets increased

as the rise in short-term investments owing to new fixed-term deposits was partially mitigated by the de-

cline of accounts receivables and to a lesser extent lower inventories. Non-current assets declined mainly

due to the amortization of frequencies as well as due to lower additions in property, plant and equipment.

The decrease in current liabilities was attributable to the redemption of multi-currency notes and lower ac-

counts payable. Non-current liabilities also declined mainly due to lower lease liabilities. The increase in

shareholders’ equity was driven by higher retained earnings due to net income generation. The equity ratio

as of June 30, 2020 amounted to 33.7%, after 31.2% as of December 31, 2019.

Net Debt

in EUR million Jun 30, 2020 Dec 31, 2019 % change

Long-term debt 2,541.1 2,539.6 0.1

Lease liability, long-term 745.4 788.2 – 5.4

Short-term debt 0.0 123.0 – 100.0

Lease liability, short-term 152.9 152.6 0.2

Cash and cash equivalents – 141.0 – 140.3 – 0.5

Net debt (incl. leases) 3,298.4 3,463.1 – 4.8

Net debt (incl. leases) / EBITDA (12

months) 2.1x 2.2x

in EUR million Jun 30, 2020 Dec 31, 2019 % change

Net debt (excl. leases) 2,400.2 2,522.3 – 4.8

Net debt (excl. leases) / EBITDA after

leases (12 months) 1.7x 1.8x


Net debt (incl. leases) declined by 4.8%, mainly driven by the redemption of multi-currency notes. Net debt

(excl. leases) / EBITDA after leases (12 months) decreased from 1.8x as of December 31, 2019 to 1.7x as

of June 30, 2020.

Capital expenditures

In the first half of 2020, capital expenditures decreased by 22.0% to EUR 323.5 mn. Tangible capital ex-

penditures declined by 4.0% to EUR 267.4 mn, mainly due to postponements and cuts in some invest-

ments in Austria as well as in our international footprint.

Intangible capital expenditures declined from EUR 136.2 mn in the comparison period to EUR 56.1 mn in

the first half of 2020 due to acquired frequencies in Q2 2019 in Austria (3.5 GHz; EUR 64.3 mn), Belarus

(2.1 GHz; EUR 9.5 mn) and Croatia (2.1 GHz; EUR 7.2 mn).

Personnel

End of period (full-time equivalent) Jun 30, 2020 Jun 30, 2019 % change

Austria 7,493 7,875 – 4.8

International operations 10,276 10,278 0.0

Corporate & other 372 388 – 3.9

Total 18,141 18,541 – 2.2

Group headcount was reduced year-on-year by 2.2%, driven by the Austrian segment due to the ongoing

restructuring measures. The overall number of employees in the CEE segments remained stable.

A1 Telekom Austria Group outlook for the full year 2020

As a consequence of the rising uncertainties following the outbreak of the COVID-19 pandemic, back in

April 2020 A1 Telekom Austria Group suspended its initial outlook for 2020 of approximately 1 - 2% growth

in total revenues and capital expenditures before spectrum and acquisitions of approximately EUR 770 mn.

Due to the meanwhile better visibility of the impacts of the pandemic and of the countermeasures taken,

the Management of A1 Telekom Austria Group has decided to present a new outlook for the financial year

2020. This outlook is however subject to no material worsening of the pandemic, which would affect the

economies in our footprint.

Q2 2020 results were heavily impacted by reduced roaming revenues following travel restrictions. Although

they have mostly been lifted within the EU in the meantime, international travel is still very restrained and

this is expected to remain throughout the rest of the year. Therefore, we estimate a negative impact of re-

duced roaming on full-year 2020 total revenues of around 2%.

Equipment revenues declined sharply due to a considerably lower number of devices sold during the con-

tainment period at the beginning of Q2 2020. Although bad debts have shown limited operational impact

from bill collections so far, the general allowances have been increased as a precautionary step.

In Belarus, the results were materially affected by the devaluation of the Belarusian Ruble in the first half of

the year 2020. The Management of A1 Telekom Austria Group expects the currency to depreciate by

around 15% (period average) against the Euro in 2020, although it should be noted that the predictability

of the Belarusian Ruble is generally limited.

Despite these challenges, we saw overall solid resilience in large parts of our business in the second quar-

ter of 2020 which, together with additional support from cost savings, translated into operative EBITDA

New outlook 2020:

~2% decline in total

revenues; CAPEX cuts of

approx. 25% vs. initial

outlook (EUR 770 mn) to

ensure flexibility and

strengthen free cash flow


growth. The free cash flow also benefited from lower capital expenditures following restrained investment

policies. A1 Telekom Austria Group will continue to place a strong focus on efficiency improvements to miti-

gate the expected negative impacts during the rest of the year.

As the situation presents itself at the moment, the Management of A1 Telekom Austria Group expects a

moderate decrease in total revenues of approximately 2% for the full year 2020. Capital expenditures be-

fore spectrum investments and acquisitions are intended to be cut by approximately 25% from the initial

outlook of EUR 770 mn to ensure full flexibility and strengthen the free cash flow profile. As stated above,

this outlook is subject to no material worsening of the pandemic situation.

The Management Board currently intends proposing a dividend per share of EUR 0.23 to the annual gen-

eral meeting 2020, which will take place on September 24, 2020. Dividend payments follow our current

dividend policy which is closely monitored and adapted if needed.

In recent years, A1 Telekom Austria Group focused on deleveraging, which led to a resilient balance sheet

structure with net debt (excl. leases) / EBITDA after leases of 1.7x as of June 30, 2020. A1 Telekom Austria

Group can rely on undrawn committed credit lines of EUR 1.1 bn, resulting in a strong liquidity position,

which was also underpinned by S&P Global’s affirmation of the BBB+ credit rating in April 2020 (outlook:

stable).


Detailed Figures

Revenues


Austria 635.9 658.5 – 3.4 1,283.4 1,305.3 – 1.7

Bulgaria 121.5 115.4 5.3 249.0 226.5 9.9

Croatia 99.3 106.5 – 6.8 200.4 208.6 – 3.9

Belarus 98.3 105.2 – 6.5 207.9 198.9 4.5

Slovenia 50.8 51.5 – 1.4 99.4 102.6 – 3.2

Serbia 68.1 68.9 – 1.2 136.7 134.0 2.0

North Macedonia 28.3 29.3 – 3.5 57.9 59.6 – 2.9

Corporate & other, eliminations – 6.4 – 12.6 n.m. – 13.1 – 23.5 n.m.

Total revenues 1,095.7 1,122.6 – 2.4 2,221.7 2,212.1 0.4

Service Revenues


Austria 574.1 576.6 – 0.4 1,151.6 1,153.8 – 0.2

Bulgaria 99.0 93.4 6.0 197.7 182.9 8.1

Croatia 86.1 91.5 – 5.9 174.4 177.0 – 1.5

Belarus 72.5 79.2 – 8.4 150.6 151.2 – 0.4

Slovenia 38.6 39.5 – 2.5 76.8 78.4 – 2.1

Serbia 51.7 51.1 1.2 103.7 98.3 5.5

North Macedonia 23.8 24.9 – 4.2 48.1 48.9 – 1.6


Total service revenues 939.5 943.7 – 0.4 1,889.3 1,868.1 1.1

Mobile Service Revenues


Austria 232.4 229.9 1.1 469.8 460.8 2.0

Bulgaria 66.5 64.5 3.1 133.1 126.3 5.4

Croatia 55.3 59.8 – 7.5 111.5 113.6 – 1.9

Belarus 61.2 67.6 – 9.4 127.5 128.7 – 0.9

Slovenia 28.3 30.2 – 6.2 56.4 59.6 – 5.4

Serbia 49.5 48.7 1.6 99.3 93.3 6.4

North Macedonia 18.1 19.4 – 7.0 36.6 36.6 – 0.1


Total mobile service revenues 509.5 515.2 – 1.1 1,030.3 1,010.1 2.0


Fixed-Line Service Revenues


Austria 341.7 346.7 – 1.4 681.8 693.0 – 1.6

Bulgaria 32.6 28.9 12.5 64.7 56.6 14.2

Croatia 30.7 31.6 – 2.8 62.9 63.3 – 0.7

Belarus 11.3 11.6 – 2.1 23.1 22.6 2.5

Slovenia 10.3 9.4 9.4 20.4 18.9 8.3

Serbia 2.3 2.4 – 6.1 4.4 5.0 – 12.4

North Macedonia 5.8 5.5 5.5 11.5 12.3 – 6.2


Total fixed line service revenues 430.0 428.5 0.4 859.0 858.0 0.1

Other Operating Income


Austria 10.9 19.8 – 45.0 22.1 33.9 – 35.0

Bulgaria 1.4 1.3 11.8 2.2 2.9 – 23.6

Croatia 1.2 1.9 – 36.6 2.3 3.3 – 31.2

Belarus 4.4 4.8 – 8.9 7.3 7.4 – 1.5

Slovenia 0.8 0.8 3.1 1.7 1.6 5.8

Serbia 0.8 0.6 36.3 1.7 1.4 16.3

North Macedonia 0.2 0.2 1.0 0.3 0.9 – 68.7

Corporate & other, eliminations – 0.1 – 0.1 n.m. 0.1 – 0.9 n.m.

Total other operating income 19.5 29.1 – 33.2 37.6 50.6 – 25.7

EBITDA


Austria 233.3 236.3 – 1.3 456.7 462.3 – 1.2

Bulgaria 48.1 45.1 6.7 94.0 87.9 6.9

Croatia 33.8 34.9 – 3.2 67.1 66.6 0.8

Belarus 45.2 47.8 – 5.5 92.6 90.4 2.5

Slovenia 14.1 14.5 – 2.9 27.9 28.4 – 1.7

Serbia 20.7 20.4 1.2 41.1 39.4 4.2

North Macedonia 10.2 10.9 – 6.0 20.8 22.0 – 5.1

Corporate & other, eliminations – 15.3 – 17.8 14.4 – 29.6 – 30.8 4.1

Total EBITDA 390.1 392.1 – 0.5 770.7 766.2 0.6


EBITDA After Leases*


Austria 213.1 216.3 – 1.5 416.4 422.5 – 1.4

Bulgaria 41.2 38.4 7.3 80.2 74.7 7.5

Croatia 30.0 31.0 – 3.4 59.6 58.8 1.3

Belarus 41.7 43.9 – 5.1 85.4 83.0 3.0

Slovenia 9.6 10.1 – 5.5 18.9 19.8 – 4.4

Serbia 16.4 16.4 0.0 32.6 31.4 3.8

North Macedonia 8.6 9.3 – 7.7 17.6 18.8 – 6.8

Corporate & other, eliminations – 15.4 – 17.9 14.1 – 29.8 – 30.9 3.7

Total EBITDA after leases 345.2 347.7 – 0.7 681.1 678.2 0.4

* EBITDA after leases is defined as EBITDA plus depreciation of right-of-use assets and interest expense on lease liabilities

Depreciation and Amortization


Austria 132.5 126.4 4.9 261.1 250.6 4.2

Bulgaria 29.7 28.6 3.6 58.9 56.7 4.0

Croatia 26.1 26.2 – 0.3 50.7 51.5 – 1.6

Belarus 16.3 23.6 – 30.9 33.9 46.8 – 27.5

Slovenia 11.3 11.2 0.3 22.2 21.9 1.7

Serbia 13.8 13.8 – 0.1 27.2 27.5 – 0.9

North Macedonia 7.5 7.3 3.2 15.0 15.7 – 4.6

Corporate & other, eliminations 1.3 0.4 241.3 2.6 0.7 298.1

Total D&A 238.5 237.5 0.4 471.7 471.3 0.1

EBIT


Austria 100.8 109.9 – 8.3 195.6 211.7 – 7.6

Bulgaria 18.4 16.4 12.1 35.0 31.2 12.4

Croatia 7.7 8.7 – 12.0 16.5 15.1 8.8

Belarus 28.8 24.2 19.3 58.7 43.6 34.7

Slovenia 2.8 3.3 – 13.9 5.7 6.5 – 13.3

Serbia 6.9 6.7 3.9 13.8 11.9 16.2

North Macedonia 2.8 3.6 – 24.3 5.9 6.3 – 6.3

Corporate & other, eliminations – 16.6 – 18.2 9.0 – 32.2 – 31.5 – 2.3

Total EBIT 151.6 154.6 – 1.9 299.0 294.8 1.4

Capital Expenditures


Austria 96.0 181.4 – 47.1 226.1 290.4 – 22.1

Bulgaria 14.9 16.3 – 8.7 29.2 26.5 10.4

Croatia 13.6 21.6 – 37.3 27.7 46.3 – 40.3

Belarus 7.5 20.5 – 63.7 15.9 27.2 – 41.5

Slovenia 4.6 3.9 17.2 6.9 6.1 12.7

Serbia 7.6 7.7 – 1.1 10.2 10.4 – 2.3

North Macedonia 2.5 3.9 – 37.4 6.0 5.4 11.4

Corporate & other, eliminations 0.7 1.4 – 46.5 1.5 2.3 – 33.9

Total capital expenditures 147.3 256.8 – 42.6 323.5 414.6 – 22.0


Capital Expenditures – Tangible


Austria 76.9 97.0 – 20.7 184.9 186.6 – 0.9

Bulgaria 12.6 13.6 – 7.7 24.4 21.0 16.1

Croatia 12.7 19.8 – 35.6 24.7 35.6 – 30.5

Belarus 6.1 9.7 – 36.6 12.0 15.2 – 21.1

Slovenia 3.8 3.3 15.0 5.9 5.2 13.1

Serbia 6.9 6.5 6.0 9.6 8.5 13.4

North Macedonia 1.9 3.7 – 48.5 5.2 5.0 4.6


Total capital expenditures - tangible 121.3 154.5 – 21.5 267.4 278.5 – 4.0

Capital Expenditures – Intangible


Austria 19.1 84.4 – 77.3 41.2 103.8 – 60.3

Bulgaria 2.3 2.7 – 14.2 4.8 5.5 – 11.7

Croatia 0.8 1.8 – 56.1 3.0 10.8 – 72.6

Belarus 1.3 10.8 – 87.9 4.0 12.1 – 67.1

Slovenia 0.8 0.6 28.4 1.0 0.9 10.3

Serbia 0.7 1.2 – 40.6 0.5 1.9 – 72.6

North Macedonia 0.5 0.2 173.7 0.8 0.4 102.7


Total capital expenditures - intangible 26.0 102.3 – 74.6 56.1 136.2 – 58.8

Wireless Subscribers

in thousands Q2 2020 Q2 2019 % change

Austria 5,003.7 5,241.2 – 4.5

thereof postpaid 3,915.2 3,851.8 1.6

Bulgaria 3,758.5 3,836.8 – 2.0

thereof postpaid 3,379.2 3,408.1 – 0.8

Croatia 1,871.9 1,843.9 1.5


Belarus 4,863.9 4,869.4 – 0.1


Slovenia 699.4 697.0 0.3

thereof postpaid 627.8 616.8 1.8

Serbia 2,272.6 2,271.5 0.1


North Macedonia 1,051.1 1,084.7 – 3.1

thereof postpaid 728.2 704.7 3.3

Total wireless subscribers 21,207.5 21,171.5 0.2



RGUs

in thousands Q2 2020 Q2 2019 % change

Austria 3,193.7 3,283.7 – 2.7

Bulgaria 1,074.9 1,044.9 2.9

Croatia 676.1 703.6 – 3.9

Belarus 618.1 624.4 – 1.0

Slovenia 208.4 190.4 9.4

North Macedonia 333.5 329.3 1.3

Total RGUs 6,104.7 6,176.3 – 1.2

Mobile churn

in % Q2 2020 Q2 2019 1-6 M 2020 1-6 M 2019

Austria 1.3% 1.4% 1.4% 1.4%

Bulgaria 1.5% 1.4% 1.4% 1.9%

Croatia 1.6% 1.8% 1.9% 2.3%

Belarus 1.2% 1.4% 1.2% 1.4%

Slovenia 1.1% 1.3% 1.1% 1.3%

Serbia 2.4% 2.7% 2.5% 2.7%

North Macedonia 1.9% 1.5% 1.7% 1.5%


EBITDA per segment - adjusted for FX-, one-off effects and restructuring charges


Austria 258.3 249.2 3.7 497.7 496.1 0.3

Bulgaria 48.1 45.1 6.7 94.0 87.9 6.9

Croatia 34.5 34.9 – 1.1 68.2 66.6 2.3

Belarus 51.6 47.8 7.9 99.7 90.4 10.3

Slovenia 14.1 15.5 – 9.0 27.9 29.4 – 5.0

Serbia 20.6 20.9 – 1.1 40.9 39.8 2.7

North Macedonia 10.3 10.9 – 5.7 20.9 22.0 – 4.9


Total adjusted EBITDA 422.3 406.4 3.9 819.7 801.4 2.3

Group EBITDA - adjustments for FX-, one-off effects and restructuring charges


EBITDA 390.1 392.1 – 0.5 770.7 766.2 0.6

FX translation effect 7.1 8.0

One-off effects – 6.8 – 6.8

Restructuring charges 25.0 21.1 41.0 42.0

EBITDA - excl. FX-, one off effects and

restructuring charges 422.3 406.4 3.9 819.7 801.4 2.3

Austria EBITDA - adjustments for one-off effects and restructuring charges


EBITDA 233.3 236.3 – 1.3 456.7 462.3 – 1.2



EBITDA excl. one off effects and

restructuring charges 258.3 249.2 3.7 497.7 496.1 0.3

EBITDA after leases – adjusted for FX-, one-off effects and restructuring charges


EBITDA after leases 345.2 347.7 – 0.7 681.1 678.2 0.4

FX translation effect 7.1 8.0



EBITDA after leases - excl. FX-, one-off

effects and restructuring charges 377.4 362.0 4.3 730.1 713.4 2.3


ARPU

ARPU-relevant revenues are wireless service revenues, i.e. mobile retail revenues (incl. customer roaming)

and mobile interconnection as well as visitor roaming and national roaming revenues. The ARPU is calcu-

lated based on ARPU-relevant revenues divided by the average subscribers in a certain period.

in EUR Q2 2020 Q2 2019 % change 1-6 M 2020 1-6 M 2019 % change

Austria 15.4 14.5 6.2 15.5 14.5 7.2

Bulgaria 5.9 5.6 4.2 5.8 5.5 6.3

Croatia 9.9 11.0 – 9.9 10.0 10.5 – 4.8

Belarus 4.2 4.6 – 9.6 4.4 4.4 – 1.2

Slovenia 13.5 14.4 – 6.5 13.4 14.2 – 5.9

Serbia 7.3 7.2 0.6 7.2 7.0 3.6

North Macedonia 5.7 6.0 – 5.3 5.7 5.6 0.7

Group ARPU 8.0 8.2 – 1.8 8.1 8.0 0.8

ARPL (reported)

ARPL-relevant revenues are fixed retail revenues and fixed interconnection revenues. The ARPL is calculated

by dividing ARPL-relevant revenues by average fixed access lines in a certain period. The difference to

fixed-line service revenues represents interconnection transit revenues, solutions & connectivity revenues

and other revenues.

in EUR Q2 2020 Q2 2019 % change 1-6 M 2020 1-6 M 2019 % change

Austria 32.5 31.2 3.9 32.2 31.2 3.3

Bulgaria 13.4 13.3 1.1 13.4 13.2 1.8

Croatia 31.0 30.1 3.0 31.3 30.2 3.5

Belarus 5.9 5.9 0.4 6.1 5.6 8.0

Slovenia 33.2 35.3 – 5.8 33.4 35.8 – 6.8

Serbia n.a. n.a. n.a. n.a. n.a. n.a.

North Macedonia 10.8 10.8 – 0.3 10.8 10.9 – 0.6

ARPL-relevant revenues (in EUR million) Q2 2020 Q2 2019 % change 1-6 M 2020 1-6 M 2019 % change

Austria 188.6 189.0 – 0.2 376.6 379.6 – 0.8

Bulgaria 22.2 21.5 3.2 44.3 42.6 4.0

Croatia 26.3 27.0 – 2.4 53.6 54.1 – 1.0

Belarus 6.8 7.4 – 8.7 14.0 14.5 – 3.8

Slovenia 8.5 8.2 3.9 16.9 16.3 3.4

Serbia n.a. n.a. n.a. n.a. n.a. n.a.

North Macedonia 5.0 4.9 1.1 10.0 9.9 1.2


Access lines (in '000) Q2 2020 Q2 2019 % change

Austria 1,929.7 2,006.5 – 3.8

Bulgaria 552.3 542.6 1.8

Croatia 281.8 298.1 – 5.5

Belarus 380.9 405.3 – 6.0

Slovenia 85.9 77.9 10.4

Serbia n.a. n.a. n.a.

North Macedonia 153.5 152.2 0.9

Belarus Key Financials in EUR and BYN

Due to the impact on the consolidated results of occasionally substantial fluctuations in the Belarusian Ru-

ble, the performance of the Belarusian segment is also presented in local currency.


Total revenues 98.3 105.2 – 6.5 207.9 198.9 4.5

Total costs and expenses – 53.2 – 57.4 7.3 – 115.3 – 108.5 – 6.2

EBITDA 45.2 47.8 – 5.5 92.6 90.4 2.5

in BYN million Q2 2020 Q2 2019 % change 1-6 M 2020 1-6 M 2019 % change

Total revenues 264.5 247.4 6.9 535.1 475.8 12.5

Total costs and expenses – 143.3 – 134.8 – 6.3 – 296.7 – 259.5 – 14.3

EBITDA 121.2 112.5 7.7 238.4 216.3 10.2


Additional Information

Risks and Uncertainties

A1 Telekom Austria Group faces various risks and uncertainties which could affect its results. For further

details about these risks and uncertainties, please refer to the A1 Telekom Austria Group Annual Report

2019, pp. 74 ff.

Waiver of Review

This financial report of the A1 Telekom Austria Group contains quarterly and half-year results which have

not been audited or reviewed by a certified public accountant.

Other

The use of automated calculation systems may give rise to rounding differences.

The reported results include depreciation and amortization of fair value adjustments resulting from past

business combinations and therefore may deviate from the result of the single financial statements.

n.m. – not meaningful, used for percentage changes >300% and others which are not meaningful.

n.a. – not applicable, e.g. for divisions by zero.

Disclaimer

Disclaimer for forward-looking statements: This document contains forward-looking statements. These

forward-looking statements are usually accompanied by words such as ‘believe’, ‘intend’, ‘anticipate’,

‘plan’, ‘expect’ and similar expressions. Actual events may differ materially from those anticipated in these

forward-looking statements as a result of a number of factors. Forward-looking statements involve inherent

risks and uncertainties. A number of important factors could cause actual results or outcomes to differ ma-

terially from those expressed in any forward-looking statement. Neither A1 Telekom Austria Group nor any

other person accepts any liability for any such forward-looking statements. A1 Telekom Austria Group will

not update these forward-looking statements, whether due to changed factual circumstances, changes in

assumptions or expectations. This report does not constitute a recommendation or invitation to purchase

or sell securities of A1 Telekom Austria Group.

Contacts

Investor Relations

Martin Stenitzer

Head of Investor Relations

Tel.: +43 (0) 50 664 23066

Email: [email protected]

Corporate Communications

Michael Höfler

Director Group Communication

Tel.: +43 (0) 50 664 30362

Email: [email protected]


Condensed Consolidated Interim Financial Statements A1 Telekom Austria Group

Condensed Consolidated Statement of Comprehensive Income

Q2 2020 Q2 2019 1-6 M 2020 1-6 M 2019 in EUR million, except per share information unaudited unaudited unaudited unaudited

Service revenues (incl. other operating income) 958.9 972.8 1,926.9 1,918.7

Equipment revenues 136.7 149.8 294.8 293.3

Total revenues (incl. other operating income) 1,095.7 1,122.6 2,221.7 2,212.1

Cost of service – 322.0 – 325.2 – 648.8 – 641.4

Cost of equipment – 134.5 – 143.8 – 288.9 – 286.6

Selling, general & administrative expenses – 246.8 – 259.1 – 508.4 – 512.9

Other expenses – 2.3 – 2.4 – 4.9 – 5.0

Total cost and expenses – 705.6 – 730.5 – 1,451.0 – 1,445.9

Earnings before interest, tax, depreciation and amortization - EBITDA 390.1 392.1 770.7 766.2

Depreciation and amortization – 197.4 – 197.7 – 390.0 – 392.2

Depreciation of right-of-use assets – 41.1 – 39.8 – 81.8 – 79.1

Operating income - EBIT 151.6 154.6 299.0 294.8

Interest income 0.7 1.3 2.0 2.7

Interest expense – 26.0 – 26.3 – 52.4 – 52.4

Interest on employee benefits and restructuring and other financial items, net 5.6 – 23.7 5.3 – 26.9

Foreign currency exchange differences, net 4.8 2.7 – 11.6 3.3

Equity interest in net income of associated companies – 11.4 – 0.2 – 11.4 – 0.2

Financial result – 26.3 – 46.2 – 68.1 – 73.5

Earnings before income tax - EBT 125.3 108.4 230.8 221.3

Income tax – 11.5 – 38.4 – 27.8 – 65.4

Net result 113.8 70.0 203.1 155.9

Attributable to:

Equity holders of the parent 113.7 69.8 202.9 155.7

Non-controlling interests 0.1 0.1 0.1 0.2

Earnings per share attributable to equity holders of the parent in euro* 0.17 0.11 0.31 0.23

Weighted-average number of ordinary shares outstanding 664,084,841 664,084,841 664,084,841 664,084,841

Other comprehensive income items:

Items that may be reclassified to profit or loss:

Effect of translation of foreign entities 17.3 9.9 – 44.7 19.9

Realized result on hedging activities, net of tax 1.1 1.1 2.2 2.2

Items that will not be reclassified to profit or loss:

Remeasurement of defined benefit obligations, net of tax 12.0 – 4.1 3.3 – 8.0

Total other comprehensive income (loss) 30.4 6.9 – 39.2 14.0

Total comprehensive income (loss) 144.3 76.8 163.9 169.9

Attributable to:

Equity holders of the parent 144.2 76.7 163.7 169.7

Non-controlling interests 0.1 0.1 0.1 0.2 * basic and diluted


Condensed Consolidated Statement of Financial Position

June 30, 2020 Dec. 31, 2019 in EUR million unaudited audited ASSETS

Current assets

Cash and cash equivalents 141.0 140.3

Short-term investments 137.4 0.0

Accounts receivable: Subscribers, distributors and other, net 800.9 873.0 Receivables due from related parties 0.6 0.9

Inventories, net 94.3 109.3

Income tax receivable 1.9 0.5

Other current assets, net 153.5 148.5

Contract assets 101.8 124.2

1,431.4 1,396.8 Assets held for sale 22.1 33.5

Total current assets 1,453.4 1,430.3

Non-current assets

Property, plant and equipment, net 2,810.3 2,840.3

Right-of-use assets, net 907.1 942.0

Intangibles, net 1,699.8 1,784.2

Goodwill 1,275.6 1,278.8

Long-term investments 12.6 14.3

Deferred income tax assets 148.1 168.9

Other non-current assets, net 25.7 27.2 Total non-current assets 6,879.2 7,055.7

TOTAL ASSETS 8,332.6 8,486.0

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Short-term debt 0.0 – 123.0

Lease liability short-term – 152.9 – 152.6

Accounts payable – 791.7 – 909.5

Accrued liabilities and current provisions – 229.5 – 239.4

Income tax payable – 31.5 – 38.8

Payables due to related parties – 0.2 – 0.6

Contract liabilities – 187.4 – 174.0

Total current liabilities – 1,393.3 – 1,637.8 Non-current liabilities

Long-term debt – 2,541.1 – 2,539.6

Lease liability long-term – 745.4 – 788.2

Deferred income tax liabilities – 4.6 – 6.7

Other non-current liabilities – 51.8 – 65.7

Asset retirement obligation and restructuring – 569.5 – 582.0

Employee benefits – 217.7 – 220.1

Total non-current liabilities – 4,130.2 – 4,202.3

Stockholders’ equity

Capital stock – 1,449.3 – 1,449.3 Treasury shares 7.8 7.8

Additional paid-in capital – 1,100.1 – 1,100.1

Retained earnings – 994.1 – 791.2

Other comprehensive income (loss) items 728.5 689.3

Equity attributable to equity holders of the parent – 2,807.3 – 2,643.6

Non-controlling interests – 1.9 – 2.4

Total stockholders’ equity – 2,809.2 – 2,645.9

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY – 8,332.6 – 8,486.0


Condensed Consolidated Statement of Cash Flows

Q2 2020 Q2 2019 1-6 M 2020 1-6 M 2019 in EUR million unaudited unaudited unaudited unaudited

Earnings before income tax - EBT 125.3 108.4 230.8 221.3

Non-cash and other reconciliation items:

Depreciation 133.1 126.8 260.9 250.6

Amortization of intangible assets 64.2 70.9 129.0 141.6

Depreciation of right-of-use assets 41.1 39.8 81.8 79.1

Equity interest in net income of associated companies 11.4 0.2 11.4 0.2

Result on sale / measurement of investments – 0.6 – 0.7 0.4 – 1.3

Result on sale of property, plant and equipment 0.3 – 7.1 1.5 – 6.5

Net period cost of labor obligations and restructuring 26.6 26.6 46.3 51.2

Foreign currency exchange differences, net – 4.8 – 2.7 11.6 – 3.3

Interest income – 0.7 – 1.3 – 2.0 – 2.7

Interest expense 19.5 49.1 44.1 77.3

Other adjustments – 3.8 – 0.5 – 1.7 – 2.8

Changes in financial positions:

Accounts receivable: Subscribers, distributors and other, net 27.4 – 26.8 52.9 – 30.4

Prepaid expenses 2.6 6.8 3.9 9.9

Due from related parties – 0.5 – 0.3 0.3 – 0.4

Inventories 18.4 8.8 13.0 15.6

Other assets 0.7 0.9 0.7 – 5.4

Contract assets 12.0 7.4 22.2 14.6

Accounts payable and accrued liabilities – 57.2 – 2.6 – 89.1 – 79.7

Due to related parties 0.5 0.3 – 0.4 0.4

Contract liabilities 1.9 – 0.1 13.8 16.7

Other:

Employee benefits and restructuring paid – 26.5 – 26.1 – 55.7 – 50.9

Interest received 0.7 1.3 2.0 2.7

Income taxes paid – 5.5 – 18.2 – 18.9 – 29.0

Net cash flow from operating activities 386.3 360.7 758.9 668.8

Capital expenditures paid – 165.1 – 257.1 – 370.3 – 473.2

Proceeds from sale of plant, property and equipment 2.2 9.9 5.3 11.7

Purchase of investments – 137.4 0.0 – 137.5 – 0.2

Proceeds from sale of investments 0.1 0.1 0.1 0.1

Sale of shares of associated companies 0.0 0.1 0.0 0.1

Net cash flow from investing activities – 300.1 – 246.9 – 502.4 – 461.5

Interest paid – 34.8 – 48.2 – 44.5 – 53.7

Change in short-term debt 0.8 98.5 – 121.4 293.8

Repayments of short-term debt 0.0 0.0 0.0 – 240.0

Dividends paid 0.0 – 139.5 – 0.6 – 139.9

Acquisition of non-controlling interests 0.0 0.0 0.0 – 0.1

Deferred consideration paid for business combinations 0.0 – 3.5 0.0 – 3.5

Lease principal paid – 29.8 – 31.0 – 85.8 – 84.9

Net cash flow from financing activities – 63.8 – 123.7 – 252.4 – 228.4

Adjustment to cash flows due to exchange rate fluctuations, net 1.7 0.8 – 3.4 1.5

Net change in cash and cash equivalents 24.1 – 9.2 0.7 – 19.5

Cash and cash equivalents beginning of period 116.9 53.3 140.3 63.6

Cash and cash equivalents end of period 141.0 44.1 141.0 44.1


Capital Expenditures

Q2 2020 Q2 2019 1-6 M 2020 1-6 M 2019 in EUR million unaudited unaudited change unaudited unaudited % change

Capital expenditures paid 165.1 257.1 – 35.8% 370.3 473.2 – 21.7%

Reconciliation of additions in accounts payable – 13.1 7.5 – 274.0% – 32.9 – 43.5 – 24.3%

Reconciliation of government grants – 3.1 – 5.9 – 46.6% – 9.6 – 12.6 – 24.2%

Reconciliation of right-of-use assets paid – 1.6 – 2.0 – 18.9% – 4.4 – 2.5 73.9%

Total capital expenditures 147.3 256.8 – 42.6% 323.5 414.6 – 22.0%

Thereof tangible 121.3 154.5 – 21.5% 267.4 278.5 – 4.0%

Thereof intangible 26.0 102.3 – 74.6% 56.1 136.2 – 58.8% For the decrease in capital expenditures related to intangible assets, see “Intangible Assets”. Capital expenditures include additions to intangible and tangible assets including interest capitalized, but do neither include additions related to asset retirement obligations nor additions to right-of-use assets according to IFRS 16. In accordance with IAS 7.43, the reconciliation of additions to accounts payable includes the adjustment of capital expenditures of the current period not yet paid as well as capital expenditures of prior periods paid in the current period. The reconciliation of government grants contains grants not yet paid, which have already been deducted from capital expenditures as well as grants of prior periods paid in the current period. The reconciliation of right-of-use assets paid contains prepayments and other direct costs, which are paid before the commencement date of the lease and are reported in the cash flow from investing activities.

Condensed Consolidated Statement of Changes in Stockholders’ Equity

in EUR million (unaudited) Capital stock Treasury

shares

Additional paid-in capital

Retained earnings

Other compre-hensive

items Total

Non-controlling

interests

Total stockholders'

equity

At January 1, 2020 1,449.3 – 7.8 1,100.1 791.2 – 689.3 2,643.6 2.4 2,645.9

Net Result 0.0 0.0 0.0 202.9 0.0 202.9 0.1 203.1

Other comprehensive income (loss) 0.0 0.0 0.0 0.0 – 39.2 – 39.2 0.0 – 39.2

Total comprehensive income (loss) 0.0 0.0 0.0 202.9 – 39.2 163.7 0.1 163.9

Distribution of dividends 0.0 0.0 0.0 0.0 0.0 0.0 – 0.6 – 0.6

Acquisition of non-controlling interests 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

At June 30, 2020 1,449.3 – 7.8 1,100.1 994.1 – 728.5 2,807.3 1.9 2,809.2

in EUR million (unaudited) Capital stock Treasury

shares

Additional paid-in capital

Retained earnings

Other compre-hensive

items Total

Non-controlling

interests

Total stockholders'

equity

At December 31, 2018 1,449.3 – 7.8 1,100.1 603.5 – 698.3 2,446.8 2.7 2,449.4

Impact of change in accounting policy 0.0 0.0 0.0 0.2 0.0 0.2 0.0 0.2

At January 1, 2019 1,449.3 – 7.8 1,100.1 603.6 – 698.3 2,447.0 2.7 2,449.6

Net Result 0.0 0.0 0.0 155.7 0.0 155.7 0.2 155.9

Other comprehensive income (loss) 0.0 0.0 0.0 0.0 14.0 14.0 0.0 14.0

Total comprehensive income (loss) 0.0 0.0 0.0 155.7 14.0 169.7 0.2 169.9

Distribution of dividends 0.0 0.0 0.0 – 139.5 0.0 – 139.5 – 0.5 – 139.9

Acquisition of non-controlling interests 0.0 0.0 0.0 0.0 0.0 0.0 – 0.2 – 0.1

At June 30, 2019 1,449.3 – 7.8 1,100.1 619.9 – 684.2 2,477.3 2.2 2,479.5 At June 30, 2020 and 2019, EUR 2.4 million and EUR 2.0 million of the translation reserve relate to the investment in Telecom Liechtenstein (see “Assets Held for Sale”) . For details on the initial application of IFRS 16 at January 1, 2019 , see the Note (3) “Basis of Presentation” to the Consolidated Financial Statements as of December 31, 2019.


Net Debt

June 30, 2020 Dec. 31, 2019 in EUR million unaudited audited

Net debt (excl. leases)

Long-term debt 2,541.1 2,539.6

Short-term debt 0.0 123.0

Cash and cash equivalents – 141.0 – 140.3

Net debt (excl. leases) 2,400.2 2,522.3

Net debt/EBITDA after leases (last 12 months) 1.7x 1.8x

EBITDA after leases (last 12 months) 1,385.6 1,382.8

Net debt (incl. leases)

Long-term debt (incl. lease liability) 3,286.6 3,327.8

Short-term debt (incl. lease liability) 152.9 275.6

Cash and cash equivalents – 141.0 – 140.3

Net debt (incl. leases) 3,298.4 3,463.1

Net debt/EBITDA (last 12 months) 2.1x 2.2x

EBITDA (last 12 months) 1,565.2 1,560.6 EBITDA after leases is defined as EBITDA plus depreciation of right-of-use assets and interest expense on lease liabilities .


Condensed Operating Segments

1-6 M 2020

in EUR million (unaudited) Austria Bulgaria Croatia Belarus Slovenia Serbia North

Macedonia Other* Consoli-

dated

External revenues 1,275.2 246.1 198.2 207.9 98.0 135.2 57.4 3.6 2,221.7

Intersegmental revenues 8.3 2.9 2.2 0.0 1.3 1.5 0.5 – 16.7 0.0

Total revenues (incl. OOI) 1,283.4 249.0 200.4 207.9 99.4 136.7 57.9 – 13.1 2,221.7

Segment expenses – 826.7 – 155.0 – 133.3 – 115.3 – 71.5 – 95.6 – 37.1 – 16.5 – 1,451.0

EBITDA 456.7 94.0 67.1 92.6 27.9 41.1 20.8 – 29.6 770.7

Depreciation and amortization – 261.1 – 58.9 – 50.7 – 33.9 – 22.2 – 27.2 – 15.0 – 2.6 – 471.7

Operating income - EBIT 195.6 35.0 16.5 58.7 5.7 13.8 5.9 – 32.2 299.0

Interest income 0.9 0.0 0.5 0.2 0.1 0.1 0.1 0.1 2.0

Interest expense – 13.5 – 1.5 – 3.3 – 3.9 – 0.7 – 1.5 – 0.7 – 27.3 – 52.4

Other financial result – 3.0 9.3 – 6.3 – 5.4 0.0 0.0 – 0.1 – 0.9 – 6.3

Equity interest in net income of associated

companies 0.0 0.0 0.0 0.0 0.0 0.0 0.0 – 11.4 – 11.4

Earnings before income tax - EBT 180.0 42.8 7.4 49.5 5.1 12.4 5.1 – 71.7 230.8

Income taxes – 27.8

Net result 203.1

EBITDA margin 35.6% 37.7% 33.5% 44.6% 28.1% 30.0% 36.0% n.a. 34.7%

Capital expenditures - intangible 41.2 4.8 3.0 4.0 1.0 0.5 0.8 0.9 56.1

Capital expenditures - tangible 184.9 24.4 24.7 12.0 5.9 9.6 5.2 0.7 267.4

Total capital expenditures 226.1 29.2 27.7 15.9 6.9 10.2 6.0 1.5 323.5

1-6 M 2019



dated

External revenues 1,293.7 221.9 205.0 199.0 100.7 128.9 59.1 3.7 2,212.1

Intersegmental revenues 11.5 4.6 3.6 – 0.1 1.9 5.2 0.6 – 27.2 0.0


Segment expenses – 843.0 – 138.6 – 142.0 – 108.5 – 74.2 – 94.6 – 37.7 – 7.3 – 1,445.9

EBITDA 462.3 87.9 66.6 90.4 28.4 39.4 22.0 – 30.8 766.2

Depreciation and amortization – 250.6 – 56.7 – 51.5 – 46.8 – 21.9 – 27.5 – 15.7 – 0.7 – 471.3

Operating income - EBIT 211.7 31.2 15.1 43.6 6.5 11.9 6.3 – 31.5 294.8

Interest income 0.8 0.0 1.3 0.1 0.2 0.1 0.1 0.0 2.7

Interest expense – 13.8 – 1.8 – 3.8 – 2.6 – 0.9 – 1.8 – 1.2 – 26.5 – 52.4

Other financial result – 3.1 – 22.2 – 0.3 2.7 0.0 0.3 0.0 – 0.9 – 23.7

Equity interest in net income of associated

companies 0.1 0.0 0.0 0.0 0.0 0.0 0.0 – 0.3 – 0.2

Earnings before income tax - EBT 195.7 7.2 12.3 43.8 5.8 10.5 5.2 – 59.2 221.3

Income taxes – 65.4

Net result 155.9

EBITDA margin 35.4% 38.8% 31.9% 45.4% 27.7% 29.4% 36.8% n.a. 34.6%

Capital expenditures - intangible 103.8 5.5 10.8 12.1 0.9 1.9 0.4 0.9 136.2

Capital expenditures - tangible 186.6 21.0 35.6 15.2 5.2 8.5 5.0 1.4 278.5

Total capital expenditures 290.4 26.5 46.3 27.2 6.1 10.4 5.4 2.3 414.6 *Other includes: Corporate, Other & Eliminations


Selected Explanatory Notes to the Consolidated Interim Financial Statements

Basis of Presentation

The consolidated interim financial statements, in the opinion of Management, include all adjustments necessary for a fair presentation of the

financial position and performance and are not audited or reviewed and should be read in connection with the audited A1 Telekom Austria

Group’s annual consolidated financial statements according to IFRS for the year ended December 31, 2019. The consolidated results for the

interim periods are not necessarily indicative of results for the full year.

The preparation of the interim financial statements in conformity with IAS 34 “Interim Financial Reporting” requires making estimates and

assumptions that affect the amounts reported in the financial statements and accompanying notes. The significant judgements and the key

sources of estimation uncertainty are the same as those described in the latest annual financial statements except for changes related to the

outbreak of the coronavirus 2019 (“Covid-19”) pandemic which are described in ”Impacts of Covid-19”. Actual results could differ from these

estimates.

Compared to other economic sectors, the telecommunications industry is in general less cyclical. Within the telecommunication sector, the

seasonality of the A1 Telekom Austria Group’s segments shows the same pattern as other European incumbents, having lower margins in the

year-end quarter due to Christmas promotions, equipment provided to customers and increases in sales commissions.

Changes in Accounting Policies

A1 Telekom Austria Group has applied the same accounting policies and methods of computation in the interim financial statements as in the

annual financial statements as of and for the year ended December 31, 2019, except the following standards which are effective from Janu-

ary 1, 2020:

IFRS 3 Amendments: Definition of a Business

IAS 1 and 8 Amendments: Definition of Material

Framework Amendments: References to the Conceptual Framework

IFRS 9, IAS 39 and IFRS 7 Amendments: Interest Rate Benchmark Reform

The amendments do not have a material impact on the condensed consolidated interim financial statements.

Impacts of Covid-19

The outbreak of the Covid-19 pandemic triggered a global economic crisis. During the lockdown period, which exceeded one month in most

of the markets that A1 Telekom Austria Group operates in, the telecommunications industry provided essential communication services. Thus

its business was impacted to a relatively lower extent.

Revenues and Total Cost and Expenses

Revenues remained stable with the following exceptions: There was a general decrease in roaming due to travel restrictions imposed by the

governments which reduced both roaming revenues and expenses. During the lockdown period equipment sales declined as shops were

partly closed. By the end of the second quarter equipment revenue reached last year’s level again. Certain large customer projects were post-

poned. By combining the effects of decreased expenses related to Covid-19, such as reduction of commissions, advertisement, travelling

and training, as well as prudent spending A1 Telekom Austria Group was able to increase its operating income (EBIT) for the first half 2020

with regard to last year’s comparison period.


Bad Debt

As a result of a higher expected credit risk due to Covid-19, A1 Telekom Austria Group increased the general allowance for accounts receiva-

ble not yet due from subscribers and has augmented its close monitoring of the development of credit risk. The effect of the change in valua-

tion allowance of EUR 5.2 million for the first half 2020 was recognized in bad debt expense in selling, general & administrative expenses.

Relief and Support Measures

In the period reported, A1 Telekom Austria Group received government assistance in the amount of EUR 0.9 million related mainly to reliefs of

certain social security contributions in Slovenia.

In Austria, a new law to strengthen the economy is expected for the second half of the year 2020.

Impairment Test

Due to the outbreak of the Covid-19 pandemic, A1 Telekom Austria Group assessed if there was an indication that assets might be impaired.

The analysis of external sources, such as the market capitalization, market rates of return on investments, the market development and the

legal environment showed temporary adverse effects and are expected to be rather balanced in the long run. Even though Covid-19 caused

an economic downturn, the telecommunications industry is expected to be quite resilient as many countries intend to focus their investments

on digitalization due to the lockdown experience. The analyses of internal sources indicate that the economic performance expected, net

future cash flows and business models are expected to be stable due to the crises-proof demand for reliable connectivity. Based on these

assumptions and updated weighted average costs of capital (WACCs) the values in use of the cash-generating units exceed the carrying

values, therefore there is no need for an impairment.

Revenues

The following table shows disaggregated revenues per product line and segment:

1-6 M 2020



dated

Mobile service revenues 469.8 133.1 111.5 127.5 56.4 99.3 36.6 – 3.8 1,030.3

Fixed-line service revenues 681.8 64.7 62.9 23.1 20.4 4.4 11.5 – 9.8 859.0

Service revenues 1,151.6 197.7 174.4 150.6 76.8 103.7 48.1 – 13.6 1,889.3

Mobile equipment revenues 95.4 47.2 22.9 38.5 19.6 31.4 9.2 0.0 264.2

Fixed-line equipment revenues 14.4 1.9 0.8 11.5 1.3 0.0 0.3 0.4 30.5

Equipment revenues 109.8 49.0 23.8 50.0 20.9 31.4 9.6 0.3 294.8

Other operating income 22.1 2.2 2.3 7.3 1.7 1.7 0.3 0.1 37.6


1-6 M 2019



dated

Mobile service revenues 460.8 126.3 113.6 128.7 59.6 93.3 36.6 – 8.7 1,010.1

Fixed-line service revenues 693.0 56.6 63.3 22.6 18.9 5.0 12.3 – 13.7 858.0

Service revenues 1,153.8 182.9 177.0 151.2 78.4 98.3 48.9 – 22.4 1,868.1

Mobile equipment revenues 100.6 39.0 27.4 40.2 22.5 34.3 9.6 0.0 273.6

Fixed-line equipment revenues 16.9 1.7 0.9 0.1 0.1 0.0 0.3 – 0.3 19.7

Equipment revenues 117.6 40.7 28.3 40.3 22.6 34.3 9.9 – 0.3 293.3

Other operating income 33.9 2.9 3.3 7.4 1.6 1.4 0.9 – 0.9 50.6

Total revenues (incl. OOI) 1,305.3 226.5 208.6 198.9 102.6 134.0 59.6 – 23.5 2,212.1 *Other includes: Corporate, Other & Eliminations


Cost and Expenses

The cost of equipment corresponds to material expense. Employee expenses and the net amount of write-down (negative sign) of inventories

are shown in the following table:

in EUR million 1-6 M 2020 1-6 M 2019

Write-down/ reversals of write-down of inventories – 1.4 – 0.1

Employee expenses, including benefits and taxes – 467.1 – 474.3

Inventories are measured at the lower of cost or net realizable value. Net realizable value of merchandise is the estimated selling price in the

ordinary course of business less the estimated selling expense.

Investments

The following table provides the classification of long- and short-term investments:


Equity instruments at fair value through profit or loss - mandatory 5.4 6.8

Debt instruments at fair value through other comprehensive income - mandatory 2.5 2.6

Debt instruments at fair value through profit or loss - mandatory 1.4 1.7

Investments at amortized cost 140.6 3.3

Investments 150.0 14.3

The increase in investments at amortized cost is due to new fixed-term deposits which are recognized in short-term investments.

Assets Held for Sale

In June 2020, an agreement on the final sales price of A1 Telekom Austria Group’s stake of 24.9% in Telecom Liechtenstein was reached. At

December 31, 2019, this investment in associates, accounted for according to the equity method for the last time, was reported in assets

held for sale in the segment Corporate & Other. At June 30, 2020, the asset held for sale was measured at fair value and the resulting loss of

EUR 11.4 million was recognized in equity interest in net income of associated companies. The final sale took place on July 21, 2020.

Intangible Assets

In the first half of 2019, A1 Telekom Austria Group acquired a 3.5 GHz band spectrum in Austria for EUR 64.3 million, which was used for the

new 5G network and capacity expansions of the existing mobile network. Furthermore, spectrum was acquired in Belarus for EUR 9.5 million

(2.1 GHz band) and in Croatia for EUR 7.2 million (2.1 GHz band).

Debt

In June 2020, A1 Telekom Austria Group entered into a bilateral credit facility with a total volume of EUR 100 million and a term until June

2021, which was not utilized at June 30, 2020.

In the first half 2020, the multi-currency notes in the amount of EUR 123.0 million were redeemed.


Provisions and Accrued Liabilities

The provision for restructuring (employees who will no longer provide services) and social plans and for civil servants who voluntarily

changed to the Austrian government to take on administrative tasks is disclosed in the following table:


Restructuring and social plans 400.0 410.4

Civil servants transferred to the government 8.6 9.7

Total restructuring 408.6 420.0

In the first half of 2020, the reduction of the provision for restructuring due to usage and the effect of changes in estimates for discount rates

was mainly offset by additions due to new social plans. The following table sets forth the discount rates applied at June 30, 2020:

Discount rate June 30, 2020 Dec. 31, 2019

Restructuring

Employees permanently leaving the service process 1.00% 0.75%

Social plans 1.00% 0.50%

Civil servants transferred to the government 1.00% 0.75%

Employee benefit obligations

Service awards 1.00% 0.75%

Severance 1.50% 1.25%

Pensions 1.25% 1.00%

The change in discount rates led to a decrease in the provisions for severance and pensions of EUR 5.3 million, which was recognized in other

comprehensive income, and to a decrease in the provision for service awards of EUR 0.8 million, which was recognized in employee ex-

penses.

In the first half of 2020, the parameters used for calculating the asset retirement obligation were adjusted to current market expectations in

each operative segment and are summarized in the following table:

June 30, 2020 Dec. 31, 2019

Discount rate 0.5% - 8.5% 0.5%-8.5%

Inflation rate 1.5% - 4.5% 1.5%-4.5%

The parameters changed in the different segments within the unchanged ranges indicated above resulting in a decrease in the provision in

the amount of EUR 4.1million. Thereof EUR 2.8 million led to a decrease of the underlying assets and EUR 1.3 million were recognized in

other operating income as the related assets are already fully depreciated.

Income Taxes

1-6 M 2020 1-6 M 2019

Effective income tax rate 12.0% 29.6%

in EUR million June 30, 2020 Dec. 31, 2019

Net deferred taxes 143.5 162.3


The decrease in the effective income tax rate is essentially due to the below mentioned effects following the Supreme Court decisions after a

tax audit in Bulgaria.

In 2018, A1 Bulgaria received the tax assessments for a tax audit covering the years 2010 to 2012, which did not accept brand name and

customer base to be tax deductible and imposed related interest on taxes. An appeal was filed against these tax assessments as the Su-

preme Court decided in favor of A1 Bulgaria regarding the amortization of customer base for the years 2007 to 2009. However, in April

2019, the Supreme Court decided for the year 2010 that the amortization of both brand name and customer base was not tax deductible. In

February 2020, the Supreme Court decided conclusively for the year 2012 that the amortization of the customer base was tax deductible. In

June 2020, the Supreme Court decided for the year 2011 that the amortization of both brand name and customer base was tax deductible.

Thus the accrual for tax and interest related to the customer base for the years 2011 and 2012 and to the brand name for the year 2011 was

released. The amount of EUR 15.4 million related to the tax benefit for prior periods was recognized in income taxes and the amount of EUR

9.4 million related to the reversal of accrued interest was recognized in interest expense.

Stockholders’ Equity

In June 2019, A1 Telekom Austria Group paid dividends to its shareholders in the amount of EUR 139.5 million (0.21 euro per share). For

safety reasons related to the Covid-19 pandemic, the Annual General Meeting 2020 was postponed to September 24, 2020. The Manage-

ment Board plans to propose to the shareholders to distribute a dividend of euro 0.23 per share.

Other comprehensive income (loss) items in the Condensed Consolidated Statements of Changes in Stockholders’ Equity include the re-

measurement of defined benefit obligations, remeasurement of investments at fair value through other comprehensive income, the hedging

reserve and the translation reserve.

Financial Instruments

The following tables show the classification as well as the carrying amounts and fair values of financial assets and financial liabilities (debt)

including information on their hierarchy level. Fair values are not disclosed in case the carrying amount is a reasonable approximation of the

fair value:

June 30, 2020 Dec. 31, 2019 Carrying amount Fair value Carrying amount Fair value in EUR million unaudited unaudited audited audited

Cash and cash equivalents 141.0 n.a.* 140.3 n.a.*

Accounts receivable: Subscribers, distributors and other 800.9 n.a.* 873.0 n.a.*

Receivables due from related parties 0.6 n.a.* 0.9 n.a.*

Other current financial assets 5.3 n.a.* 5.6 n.a.*

Other non-current financial assets 17.4 n.a.* 18.1 n.a.*

Investments at amortized cost 140.6 n.a.* 3.3 n.a.*

Financial assets at amortized cost 1,105.9 n.a.* 1,041.2 n.a.*

Equity instruments at fair value through profit or loss - mandatory 5.4 5.4 6.8 6.8

Debt instruments at fair value through other comprehensive income - mandatory 2.5 2.5 2.6 2.6

Debt instruments at fair value through profit or loss - mandatory 1.4 1.4 1.7 1.7

Investments at fair value 9.4 9.4 11.0 11.0 * Not applicable as the practical expedient of IFRS 7.29 (a) was applied.

Investments at fair value mainly include quoted bonds, quoted shares and investment funds and are thus mainly classified as Level 1 of the

fair value hierarchy.


June 30, 2020 Dec. 31, 2019 Carrying amount Fair value Carrying amount Fair value in EUR million unaudited unaudited audited audited

Bonds 2,541.1 2,720.6 2,539.6 2,748.8

Multi-currency notes 0.0 0.0 123.0 123.0

Accounts payable - trade 572.2 n.a.* 707.0 n.a.*

Accrued interest 37.3 n.a.* 41.3 n.a.*

Payables due to related parties 0.2 n.a.* 0.6 n.a.*

Other current financial liabilities 28.2 n.a.* 37.1 n.a.*

Other non-current financial liabilities 48.8 50.1 62.5 62.5

Financial liabilities at amortized cost 3,227.9 n.a.* 3,511.0 n.a.*

Lease liability 898.3 n.a.* 940.8 n.a.* * Not applicable as the practical expedients of IFRS 7.29 (a) respectively IFRS 7.29 (d) for lease obligations were applied.

The fair values of the quoted bonds (EMTN bonds and Eurobonds) equal the face value multiplied by the price quotations at the reporting

date and are thus classified as Level 1 of the fair value hierarchy.

The fair values of the multi-currency notes are measured at the present values of the cash flows associated with the debt, based on the appli-

cable yield curve and credit spread curve for specific currencies, and are thus classified as Level 2 of the fair value hierarchy.

The fair values of the other non-current financial liabilities are measured at the present values of the cash flows, discounted based on current

interest rates, and are thus classified as Level 2 of the fair value hierarchy.


Subsequent Events

On July 9, 2020, A1 Telekom Austria Group acquired 100% in STUDIO PROTEUS, d.o.o., Postojna (“Studio Proteus”) via its Slovenian subsidi-

ary A1 Slovenija. Studio Proteus, a provider of telecommunication services and cable TV in Slovenia, will be reported in the segment Slovenia.

On July 17, 2020, A1 Telekom Austria Group acquired an additional stake of 31% in Invenium Data Insights GmbH, Graz (“Invenium”) and now

holds in total 51% in Invenium, which provides movement analyses based on big data and will be reported in the segment Austria. The agree-

ment also includes a put-option of the minority shareholders for the remaining 49%, exercisable for the first time on September 1, 2023, with

a variable price depending on certain performance indicators of the company.

Vienna, July 21, 2020

The Management Board

CEO Thomas Arnoldner

COO Alejandro Plater

CFO Siegfried Mayrhofer


Statement of All Legal Representatives

Declaration of the Management Board according to §125 Para 1 Stock Exchange Act

We confirm to the best of our knowledge that the condensed interim financial statements give a true and fair view of the assets, liabilities,

financial position and profit or loss of the group as required by the International Financial Reporting Standards (IFRS) and that the group

management report gives a true and fair view of important events that have occurred during the first six months of the financial year and their

impact on the condensed interim financial statements and of the principal risks and uncertainties for the remaining six months of the finan-

cial year and of the major related party transactions to be disclosed.

Vienna, July 21, 2020

The Management Board

CEO Thomas Arnoldner

COO Alejandro Plater

CFO Siegfried Mayrhofer

results for the second quarter and first half 2020 · results for the second quarter and first half...

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